Peru proposes South American Pacific countries free movement zone

Peruvian President Alan Garcia is proposing to Chilean President Sebastian Piñera a zone for free movement of goods, people and capital, a zone that would include Colombia, Panama, Ecuador, Peru and Chile.

President Alan García wants to promote trade and tourism

The proposal for the integration project was presented by Peru's Minister of Economy and Finance, Mercedes Araoz, to Chilean Foreign Minister Alfredo Moreno during Araoz's visit to Chile this week.

The free movement of goods would aim to give the products of the five countries a competitive advantage compared to goods imported from third party countries. The proposal also outlines a plan of improving customs infrastructure between the countries to make them more unified and more efficient in land, sea and air border checks. An important upshot of the plan would be to make South America’s Pacific coast countries more trade-friendly with Asian markets.

The plan also calls for policies that would reduce travel restrictions, with the aim of giving a positive boost to the flow of tourists, and which would promote the free movement of capital and financial services, with the hope of increasing direct investment and real estate sales among the five countries. The initiative would also make it easier for the public to access bank accounts, loans and credit cards.

According to Garcia, the success of the proposal will largely depend on how Chile takes to it. He hopes that during Piñera's official visit to Peru on November 25 the matter will be discussed in greater detail.

The timing of the delivery of this proposal coincides with much improved relations between Lima and Quito. Ecuador was included in the agreement, despite the fact that its economy does not subscribe to the same, more liberal economic policies that are found in the other four countries.

Analysts suggest the proposal is an attempt by Garcia to take on a regional leadership role. Since the rescue of the 33 miners in Chile, Piñera has been in the international spotlight and has emerged as a powerful force in South America.

If an agreement is reached, it could also reinforce Garcia's attempts to focus on the positive between Chile and Peru. Relations have been strained the past two years by a lawsuit pending at the International Court of Justice (The Hague) regarding an on-going the maritime dispute. The two countries have been unable to agree on how their maritime borders should be drawn, and in 2008 Peru filed a complaint with The Hague. A final ruling is expected to come from The Hague in November of this year.